The rally-that-central-bankers-built continued overnight, with the BoJ winning the booby prize. As the largest owner of Japanese stocks, eclipsing even the Government Pension Investment Fund, the BoJ forced the NKD 2.7% higher on the day and a ridiculous 6% higher since last Monday.
This is how it’s done in Japan. As money supply expands at an astounding rate…
…the government is shoveling trillions into stocks.
And, it’s coming soon to a market near you.
* * *
Not one to be left out, ES also rallied to new all-time highs.
Thank God we don’t have to worry about bubbles.
continued for members…The algos didn’t need much encouragement. The usual suspects – VIX, CL and USDJPY – all played a role. This tiny little dip below the white channel bottom is the one we discussed yesterday.
It brings the SMA10 that much closer to the SMA20 – in other words, a bearish (bullish for stocks) 10/20 cross. At least that was the signal that got the rally started after yesterday’s close.
Meanwhile, CL is rallying – reportedly on the boost in oil/gas consumption that the relief package will supposedly deliver. Note that there are no new highs here, merely a rise back above the SMA10.
Same story for USDJPY, which kept its streak alive despite not making any real headway.
This leaves ES still broken out and solidifies SPX’s breakout – both above their 1.272 Fib extensions. However, both face overhead resistance in the form of channel lines which have very effectively triggered past breakdowns in Feb and Sep 2020 and Oct 2018.
I have no problem tagging along on breakouts such as this. But, the presence of this clearly influential channel line means there is a substantial risk of a sudden breakdown.
Factor in the likely reversal in oil and gas…
…the likely rebound in DXY…
…and the likely breakdown in 10Y yields…
…and I would fade this rally.
I still have no confidence that GC and SI are going to break out in the near term – though I’d be happy to be proven wrong. 
UPDATE: 3:00 PM
The 1.272 as support instead of resistance – an important element of the meltup playbook.
